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Everyday Cheapskate: Here are five rules to build wealth

At the tender age of 11, I made a solemn vow that when I grew up I was going to be rich. My plan was simple: Marry well.

I bless the day I married my husband, a man who is rich in character and unfailing love. I assumed his money would follow. While waiting for wealth to descend upon me, I made the near-tragic error of spending as though I were already rich. That landed us in so much financial trouble that it took 13 years to repair.

The experience taught me a very important principle: How much you spend matters much more than how much you earn.

Rule No. 1: Live smarter

Living below your means is the secret to prosperity. In this country we define rich as having a lot of material things. Look at what you have already and say with confidence, “I have enough.” You don’t need to borrow more money to get more stuff, because all that means is you’ll have to work more to pay for it.

Rule No. 2: Make your money grow

Pay yourself first. Invest money automatically taken out of your paycheck or bank account on a regular basis. Sign up for your employer’s retirement-savings plan or open an IRA. Increase your automatic deposit whenever you get a raise. In your 20s, save at least 10 percent of your salary. In your 30s, save 15 percent; maintain that level in your 40s and 50s.

Even small amounts of money invested regularly in a tax-sheltered retirement account using a diversified stock fund with dividends reinvested can create great wealth over the long run.

Rule No. 3: Protect your main asset

Buy a home and live in it. You cannot get rich renting; it’s impossible. Over time, despite the ups and downs of the housing market, owning your home is one of the best financial moves you can make. Homeowners in America are many times wealthier than renters.

Leave your home equity alone. Don’t borrow against it. Let it build, so you’ll own the house free and clear by the time you retire. That equity is potentially a big pot of money you can use.

Rule No. 4: Avoid toxic debt

Pay your credit card bill(s) in full every month. No exceptions! It’s easy to let a month slide by paying just the minimum, but get in that habit and your credit card debt can quickly grow huge. Credit card debt is the most toxic debt there is; you’ll wind up paying a fortune in interest charges. Paying late fees just throws more good money away.

Rule No. 5: Be patient!

Despite all the infomercials that tell you the secrets of getting rich quickly with real estate, gold coins or llama farms, the truth is there’s no secret formula. It just takes time. You already know that the key is to spend less than you earn and invest those savings wisely. You’ll sleep well knowing that you have the cushion to meet any financial problems that arise.